Saturday, May 18, 2019

Fair Trade Winds Blowing

Dairy farmers and Co-Ops are breathing a little easier today following yesterday’s announcement that the United States will be lifting tariffs on steel and aluminum imported from Canada and Mexico.  Mexican and Canadian retaliatory tariffs on a broad range of U.S. products, including pork, beef, bourbon and dairy will also be lifted. 
 
This opens the doors to eventual congressional approval of a new North American trade pact which is good news for America’s hard-working dairy farmers who have suffered over the last year from the loss of their two largest trading partners.     
 
The only fly in the ointment is that Friday’s ‘deal’ allows the U.S. to re-impose the tariffs if either aluminum or steel imports 'surge meaningfully' over a period of time.  What constitutes a meaningful surge is to be defined by US steel and aluminum interests – which means that at the first sign of price and/or supply competition they’ll run crying to the White House.   Translation:  Politically-managed trade. 
 
Nevertheless, all of this is progress in the right direction even though we are months and months away from congressional ratification of the USMCA.  Personally, I've been heartened over the past seven days as more and more people have spoken truth to power about tariffs.  The Truth is that Importers pay these trade taxes and the costs are virtually always paid by you and I - the consumer.  
 
One final thought – I think that Tariff Man got a little jangled by last week's market volatility.  Raising the specter of his doppelgänger - Dow Man.  And, of-course, the 2020 election. 
 
photo - ABC News
 
Have a terrific weekend!

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